According to a report by CoinDesk, JPMorgan stated in a research report on Wednesday that hyperscalers and AI companies are exploring different alternative solutions to meet their energy needs, which could make Bitcoin mining companies with advantageous power contracts attractive acquisition targets.
Following the Bitcoin halving, M&A activities in the mining sector are heating up. On Tuesday, cloud computing company CoreWeave signed a 200 MW AI agreement with Bitcoin mining enterprise Core Scientific, reportedly receiving a cash acquisition offer from the latter, causing a surge in its stock price. Meanwhile, another large Bitcoin mining company, Riot Platforms, made a hostile takeover bid for its competitor Bitfarms last month. According to Reuters, Riot Platforms has announced the acquisition of a 12% stake in Bitfarms today.
JPMorgan stated in the report that the transaction with CoreWeave could potentially accelerate the participation of the crypto mining industry in high-performance computing (HPC). Within the scope of the bank’s research, Core Scientific’s news had the greatest impact on Iris Energy, an Australian mining company with a buy rating, as JPMorgan referred to it as an early participant in high-performance computing and having the right to develop over 2 GW of power.
JPMorgan stated that this deal could raise the valuation floor for “secondary scale miners” as a new buyer group (hyperscalers) has emerged. The bank also added that by transferring power capacity away from miners, this could help “rationalize the Bitcoin network” and improve the profits of remaining operators.
JPMorgan estimated that publicly traded Bitcoin mining companies in the US consume up to 5 GW of power and could use an additional 2.5 GW, making them potential attractive targets.
Furthermore, some Bitcoin miners are facing financial pressures to exit the market post-halving, making them more open to transactions. Last week, brokerage firm Bernstein stated that Riot Platforms is in the best position to consolidate the mining sector as they have the financial capability to carry out deals.
Related reports: “JPMorgan: Bitcoin Mining Costs Reduced from $50,000 to $45,000” “Bitcoin Halving Leads to Large Number of Old Mining Machines Moving out of the US, Mostly to Africa and South America” “Cantor Fitzgerald Report: 11 Public Mining Companies May Struggle to Profit from Mining Business Post Bitcoin Halving”
